November Auto Sales: The overall automobile sales in November delivered a mixed performance supported by strong urban sales but slower rural recovery, analysts said in their comment, adding that the success of new launches and easing supply constraint benefitted sales during the month.

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With passenger and commercial vehicles witnessing stellar growth in terms of volumes and sales in November, the two-wheelers (2W) remained subdued despite the improvement, the analysts believe.

Seasonally, the two-wheeler industry declines in double-digit during the post-festival months due to demand moderation and inventory de-stocking, they mentioned.

“While the PV segment witnessed strong performance due to the ease on chip shortage and success of new launches, the CV segment also witnessed strong performance. However, slow rural recovery and higher inflation impacted the performance of rural-centric vehicles like 2Ws in November,” Mitul Shah, Research Analyst at Reliance Securities said in a report.

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Shah added that the channel check suggests that overall sales pick-up is slow due to subdued demand in rural markets and domestic inflation impacting consumption, except in CV and 3W (three-wheeler) segments.

The analyst at Reliance Securities expects sales to remain under pressure in December 2022 except for PVs (passenger vehicles) due to a healthy order book and it would see a revival in the fourth quarter of the financial year 2022-23 (Q4FY23).

Similarly, Nishit Jalan, Research Analyst, Axis Securities said, November wholesale volumes indicate that 27 per cent year-on-year (YoY) growth for PVs driven by strong demand and high order backlog; however, early signs of discount are visible, especially in entry segments.

Jalan added that the lower-than-expected dispatches of 2Ws for most manufacturers – no visible signs of recovery in rural markets as yet, while tractors demand continues to surprise positively with 10 per cent YoY growth for M&M and CV demand remains strong.

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On the contrary, Rishi Vora, Research Analyst, Kotak Securities said that the auto sector reported a weak set of wholesale numbers across most segments in November as the volumes of the domestic PV and 2W segment came in below expectations, while tractor volumes were above estimates.

“The domestic 2W segment’s volumes witnessed a sharp decline month-on-month due to a channel inventory correction”, Vora said. Even Shah of Reliance Securities had said that 2W segment witnessed highly subdued performance with YoY as well as MoM decline.

The PV and CV segments’ volumes witnessed a 5-10 per cent fall MoM in November 2022, mainly owing to weak demand for the CNG segment, and export 2W volumes remained under pressure in November, the analyst at Kotak Securities had said.